Plan advisors are finding
that more and more plan sponsors are using requests for proposals (RFPs). It’s
a trend that’s here to stay.
RFPs offer an opportunity
for plan advisors to show sponsors how great they are. But there are certain
things advisors need to know up front to avoid making some big mistakes.
NAPA 401(k) Summit
speakers Greg Middleton of CAPTRUST, Laurie Coleman of Spencer Fane LLP, Cindy
Degulis of Retirement Playbook, and Matt Hawes of Morgan, Lewis, & Bockius
LLP offered views from, respectively, advisory, HR, advisor liaison, and
attorney perspectives. They discussed how to navigate the RFP process and
offered advice about what works and what doesn’t.
4 key things
advisors need to know and accept about the RFP process
1. Advisor RFPs are here to stay as part of
the sale process.
2. RFPs are “a detail-oriented exclusion
process” — don’t give a committee an excuse to boot you.
3. Before you walk into the finals, the
committee has been doing their homework for the last 12 weeks.
4. Getting hired comes down to fit — it’s one
part meeting a plan sponsor’s scorecard, one part effective communication, and
one part gut instinct on the part of the committee.
How the RFP process
works
Generally the process
begins with a kickoff meeting where the plan sponsor committee, and any helping
intermediaries such as attorneys or advisor liaisons go over objectives.
If an attorney is assisting with the process, he or she might make sure the
committee is considering what kind of relationship they want with an advisor,
whether it’s a fiduciary one or not, and review and document the RFP process.
A list of potential
advisors to consider is created, or sometimes an advisor liaison or assisting
consultant will provide a list of vetted advisors. The incumbent advisor, if
there is one, should generally be included.
The RFP is created,
proposals are gathered and evaluated, and a small group of finalists are asked
to present in person to the committee. Then a choice is made.
The timeline can vary but
typically it is around 12 weeks, from kickoff to selection, the panel said.
Tips for advisors
when they receive the RFP
1. Understand the timeline and honor the
deadline — and remember there are usually multiple deadlines.
2. If the RFP lists a contact person for
questions, only go through that person, even if you are acquainted with someone
on the committee or see them on LinkedIn.
3. Be sensitive about offering details and
ensure your message doesn’t get lost in unnecessary details:
a. Some plan
sponsors want a high level for the RFP and will expect more details in the
final presentation.
b. Some plan
sponsors enter RFP responses online into a grid to do a side-by-side comparison
of features and fees, so don’t overwhelm with too many details.
c. One area
where details are important for many is that of fees — state your annual fee and
list what is included so the committee understands your fees.
d. If an RFP
asks for a calendar snapshot of what the plan sponsor can expect over 12 months
of working with you, offer it.
e. “If they want
a ham sandwich, don’t give them the world’s greatest chicken sandwich,” said
attorney Matt Hawes.
4. Realize that every RFP
is unique, depending on what plan sponsors are looking for.
Tips for advisors
making a final presentation
You made the cut and now
you’ve been invited to give a presentation to the committee. What should you
keep in mind?
Here are some tips from
the panel
1. Ideally, you should get an agenda to follow
for the presentation. This is important for customizing your presentation and
also seeing if any focus areas shifted for the committee during the process.
“If no agenda is offered, you can ask for one. If there is none, you can start
your presentation by saying ‘here’s the agenda we will follow,’” said Laurie
Coleman.
2. When you get into the room, know that the
committee has done a lot of research. “If you’re just recapping what’s in your
RFP, you’re probably not going to make the cut,” said Matt Hawes.
3. Make it all about the client — research
them, know their culture, know what they value, know their pain points and talk
about how you helped clients in similar situations. “Engage the committee
rather than just present at them,” said Cindy Degulis.
4. Know how you’re different from the
competition and be able to differentiate yourself, but avoid frequent comments
that compare and contrast to the competition — even if you don’t intend it,
your tone might be read as snarky.
5. Show up with the team that will be serving
the plan sponsor in the foreseeable future. “More is not better — make sure
everyone has a role in the meeting and isn’t just sitting there,” Cindy Degulis
said.
6. Demonstrate strong communication skills and
make a connection — there can be some back and forth with the committee rather
than a lecture.
7. Tailor your message to who is there — find
out who will be in the room, if possible. Remember that not everyone (or
sometimes anyone) on the committee is a financial expert.
8. Be sure to engage with everyone on the
committee — a plan sponsor who heads an HR department mentioned in another NAPA
workshop how annoying it was to have prospective advisors talk only to the CFO,
ignoring him and others on the committee.
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